After the RMB falls below 7: Is there still room for appreciation in 2026?

Recently, the RMB to USD exchange rate hit a new low this year, with the USD to offshore RMB (USD/CNH) falling to 6.9965, and the USD to onshore RMB (USD/CNY) dropping to 7.0051. This is the first time since September 2024 that this psychological threshold has been broken, sparking widespread market discussion about future trends.

For participants engaged in USD to RMB transactions or with foreign exchange needs, this appreciation has brought tangible benefits. So what are the core factors driving the RMB’s strength? Will it continue to rise in the future?

Three Forces Driving the RMB Appreciation

The current strength of the RMB is driven by three clear factors.

First is the overall weakening of the USD. Since the beginning of the year, the US dollar index has fallen by over 10%, and in the past month, it has declined by more than 2%. Under the dual influence of the Federal Reserve’s rate cut cycle and the global de-dollarization wave, the USD safe-haven premium has gradually diminished, creating a favorable external environment for the RMB to appreciate against the USD.

Second is the guidance from the central bank. Throughout the year, China’s central bank has continuously adjusted the midpoint of the RMB exchange rate upward, signaling policy support for RMB appreciation to the market. This sustained policy tilt has laid the foundation for the RMB’s continued rise.

The third driver is the year-end foreign exchange settlement wave. In 2025, China accumulated a substantial trade surplus. As the year-end approaches, export companies concentrate on settling foreign exchange, converting large amounts of USD into RMB, providing strong buying support. Meanwhile, the central bank maintains relatively stable monetary policy, and offshore liquidity remains tight, further boosting the appreciation trend.

Wang Qing, Chief Macro Analyst at Orient Securities, pointed out that, “The combined effect of a weak USD and seasonal foreign exchange conversions by exporters makes RMB strengthening inevitable. The ongoing appreciation trend also helps enhance China’s capital market attractiveness to overseas funds.”

Will the RMB Continue to Rise in 2026?

Although the RMB against the USD has already experienced a significant appreciation, most analytical institutions believe that, from the perspectives of purchasing power parity and trade-weighted indices, the RMB is still undervalued.

ANZ Bank senior strategist Xing Zhaopeng predicts that in the first half of 2026, USD to RMB will fluctuate within the range of 6.95-7.00, indicating room for further appreciation.

Goldman Sachs holds a more optimistic view. The firm believes that the RMB is undervalued by about 25% relative to its economic fundamentals and forecasts that by mid-2026, USD to RMB will dip to around 6.90, with further declines to 6.85 possible by the end of the year.

Bank of America focuses on the easing of US-China relations. The institution believes that improved trade relations will promote further USD selling by Chinese exporters, and by the end of 2026, USD to RMB could fall to around 6.80.

The common implication of these forecasts is that the RMB’s appreciation trend still has potential to continue in 2026. For investors involved in USD to RMB conversions, this means the exchange window is gradually opening.